Key facts
- Existing U.S. home sales increased 3.2% in May to a seasonally adjusted annual rate of 4.17 million units, the fastest pace since December.
- The median sales price of existing homes rose 1.3% year-over-year to $429,300, an all-time high for May.
- Sales growth occurred despite rising mortgage rates, which remain below year-ago levels.
- First-time buyers accounted for 35% of sales, the highest share since June 2020.
- Home inventory at the end of May was 1.55 million units, representing a 4.5-month supply.
Sales of previously occupied U.S. homes surged in May to their highest level since December, reaching a seasonally adjusted annual rate of 4.17 million units, according to the National Association of Realtors (NAR). This marks a significant turnaround after a slow start to the spring homebuying season.
The increase of 3.2% from April and a similar gain compared to May last year surpassed economists' expectations. Sales rose across the Midwest, South, and West, though they declined in the Northeast. This uptick occurred even as mortgage rates have generally trended higher this spring, although they remain below year-ago levels.
The median sales price for existing homes climbed 1.3% from a year ago to $429,300, setting an all-time record for May. Home prices have now increased on an annual basis for 35 consecutive months. Despite price growth, affordability is improving in many areas due to home price growth lagging income growth and mortgage rates being lower than last year, according to NAR Chief Economist Lawrence Yun.
First-time buyers constituted 35% of sales in May, the highest proportion since June 2020. Median list prices saw their steepest annual drop since 2017, down 2.4% in May. Inventory levels increased slightly to 1.55 million homes, providing a 4.5-month supply at the current sales pace, still below the 5- to 6-month supply considered balanced.
The housing market has been in a slump since 2022, with sales largely hovering near a 4-million annual pace, far below the historical norm of 5.2 million. Years of soaring prices and a chronic shortage of homes for sale have contributed to this prolonged slowdown.